Handling Misinformation in Divorce Real Estate and Divorce Mortgage Planning

Accurate information is crucial in the complex and often emotionally charged world of divorce. Misinformation in divorce real estate and divorce mortgage planning can cause significant harm, not just financially but emotionally as well. Unfortunately, there is a growing trend of professionals needing more practical experience in these fields spreading misinformation that can derail divorce and leave clients and family law professionals in difficult positions.

The Dangers of Misinformation

Misinformation in divorce real estate and mortgage planning can come from well-meaning professionals who need more practical experience and specialized knowledge to navigate the intricacies of these fields. While education is essential, it is only the foundation. Without the practical experience to apply that education, the knowledge remains theoretical and can be dangerously misleading when put into practice.

For instance, a real estate agent who has not worked extensively with divorcing clients may need help understanding the nuances of how real property is treated in divorce. They might offer advice based on general real estate principles, not realizing that divorce cases involve unique considerations, such as the division of equity, tax implications, and the impact of court orders on property transactions. Similarly, a mortgage professional who lacks experience in divorce mortgage planning may not fully grasp the complexities of lending in the context of a divorce, potentially leading to misguided advice that could jeopardize a client’s financial future.

The Role of Specialized Training and Experience

This is where the importance of specialized training and practical experience comes into play. For example, the Certified Divorce Lending Professional (CDLP®) designation is designed to bridge the gap between theory and practice in divorce mortgage planning. CDLPs receive comprehensive training covering family law, financial and tax planning, real property, and mortgage financing. This specialized training and practical experience equips CDLPs to provide accurate, reliable advice that can help divorcing homeowners make informed decisions.

Without this specialized training and experience, professionals may inadvertently spread misinformation that can cause more harm than good. For example, a general mortgage professional might advise a divorcing client to refinance their mortgage without considering the impact of the divorce decree, the division of marital assets, or the client’s post-divorce financial situation. This could result in a client being unable to qualify for a loan or, worse, losing their home.

The NAR Settlement Agreement and Misinformation

A prime example of the dangers of misinformation is the recent NAR (National Association of Realtors) settlement agreement regarding buyer agent commissions. This agreement has sparked a lot of confusion and misinformation, particularly in the context of divorce real estate transactions.

Some professionals without a deep understanding of the agreement or its implications have spread misinformation that could ultimately harm divorcing homeowners. For example, there have been claims that the agreement will drastically reduce buyer agent commissions, which could, in turn, affect the sale price of homes. However, these claims often fail to consider the full context of the agreement and the ways in which it might be implemented.

Additionally, it has been suggested that if the buyer now needs to pay the Buyer’s Agent’s Commission when purchasing a home post-divorce, this commission—typically around 2-3% of the sales price—should be negotiated into the divorce settlement. While this idea seems logical on the surface, it raises further questions: Does this mean that going forward, the spouse who wishes to retain the marital home should also negotiate the costs associated with refinancing the existing mortgage?

The spread of such misinformation can have significant consequences for divorcing homeowners. If the intricacies of the NAR settlement are misunderstood, or if blanket assumptions are made about how it should affect divorce settlements, homeowners may find themselves at a financial disadvantage. Misinformation could lead to unnecessary conflicts, misaligned expectations, or even financial losses.

It is unfortunate that some individuals in the industry are quick to disseminate misleading information about the NAR settlement without fully understanding its implications or the potential impact on divorcing homeowners. This underscores the critical need for professionals who are well-versed in both real estate and divorce law to guide clients through these complex situations.

The Importance of Vetting Professionals

Given the potential for misinformation, it is crucial that both family law professionals and divorcing homeowners thoroughly vet the professionals they choose to work with. Not all real estate agents or mortgage professionals have the necessary expertise to handle the unique challenges of divorce transactions.

When selecting a divorce real estate or mortgage professional, it’s essential to look beyond general qualifications and consider their specific experience with divorce cases. Do they have a deep understanding of the legal and financial complexities involved? Have they worked closely with family law professionals? Can they provide references from other divorcing clients?

It’s also important to recognize that even if an attorney is the one providing training programs to real estate and mortgage professionals or divorce financial planners, if that attorney lacks experience in family law, divorce real estate, or mortgage planning, they too can cause more harm than good. Without hands-on experience in these specialized areas, even a well-intentioned attorney may spread misinformation that can mislead professionals and, in turn, negatively impact their clients. Education without relevant experience is merely theoretical, and in the complex world of divorce, theory alone is not enough.

For mortgage professionals, the CDLP® designation is a strong indicator of expertise in divorce mortgage planning. CDLPs are trained to understand the intersection of family law and mortgage financing, making them uniquely qualified to navigate the challenges of divorce. They are not just mortgage professionals; they are divorce professionals who happen to offer mortgage financing. This distinction is critical when dealing with the complexities of divorce.

The Risks of Working with Inexperienced Professionals

Working with professionals without the necessary experience in divorce real estate and mortgage planning can lead to various problems. For example:

Inaccurate Valuations: An inexperienced real estate agent might need help understanding the impact of a divorce on property values or overlook essential factors like pending court orders or the potential for disputes between the parties. This can lead to inaccurate valuations that either overestimate or underestimate the property’s worth, potentially costing one or both parties a significant amount of money.
Failed Transactions: Divorce transactions often have tight timelines and complex requirements. A real estate agent or mortgage professional who is not familiar with these complexities may struggle to navigate them, leading to failed transactions that delay the divorce process and increase clients' stress.
Legal Complications: Misunderstandings about the legal aspects of divorce, such as how property should be divided or how court orders affect transactions, can lead to legal complications. For example, if a mortgage professional advises a client to refinance their home without considering the terms of the divorce decree, the client may end up violating a court order, which could have serious legal consequences.

Education vs. Experience: Why Both Matter

While education is a crucial foundation, it is only part of the equation. In fields as complex as divorce real estate and mortgage planning, practical experience is equally important. Education provides the theoretical knowledge needed to understand the principles of real estate and mortgage lending, but experience teaches how to apply those principles in real-world situations.

Professionals who rely solely on their education without the benefit of practical experience may find themselves unprepared for the complexities of divorce transactions. They might know the theory behind property division or mortgage refinancing, but they need experience to anticipate the challenges that can arise during a divorce.

This is why specialized training programs like the CDLP® designation are so valuable. They provide not only the education but also the practical tools and insights needed to navigate the unique challenges of divorce mortgage planning. CDLPs are trained to handle the gray areas—the situations where theory alone is not enough and where practical experience makes all the difference.

The Role of Family Law Professionals

Family law professionals play a critical role in guiding their clients through the divorce process. Part of that role involves helping clients choose the right professionals to work with. Given the potential for misinformation, it’s essential that family law professionals thoroughly vet the real estate agents and mortgage professionals they refer to their clients.

This vetting process should include evaluating the professional’s experience with divorce cases, their understanding of the legal and financial complexities involved, and commitment to ongoing education and professional development. By working with qualified, experienced professionals, family law attorneys can help ensure that their clients receive accurate advice and avoid the pitfalls of misinformation.

The Importance of Expertise in Divorce Real Estate and Mortgage Planning

Misinformation in divorce real estate and mortgage planning can cause significant harm, leading to financial losses, legal complications, and increased client stress. To avoid these pitfalls, family law professionals and divorcing homeowners must work with experts with the necessary education and experience to navigate the complexities of divorce transactions.

The Certified Divorce Lending Professional (CDLP®) designation is a crucial indicator of expertise in divorce mortgage planning, providing assurance that the professional has both the theoretical knowledge and practical experience needed to handle these challenging cases. By working with CDLPs and other qualified professionals, family law attorneys and divorcing homeowners can protect themselves from misinformation and achieve better outcomes in their divorce proceedings.

In a field where decisions have long-lasting consequences, expertise matters. Make sure you’re working with professionals who have the training, experience, and commitment to guide you through the process with accuracy, empathy, and professionalism

This is for informational purposes only and not to provide legal or tax advice. You should contact an attorney or tax professional for legal and tax advice. Interest rates and fees are estimates provided for informational purposes only and are subject to market changes. This is not a commitment to lend. Rates change daily—call for current quotations.